Amigo Holdings PLC (LSE:AMGO) shares leapt over 41% after it dodged a fine of almost £73mln from the UK financial watchdog and instead only was "publicly censured".
The Financial Conduct Authority (FCA) said that the guarantor lender's failure to have proper systems in place to assess the circumstances of its customers and their guarantors before it approved loans between 1 November 2018 and 31 March 2020 led to a "high risk of consumer harm, both to borrowers and guarantors".
Amigo's insufficient evaluation processes led to it lending amounts that were unaffordable for some borrowers and meant guarantors had to step in, said Mark Steward, the FCA's executive director of enforcement and market oversight.
"It also had the effect of prioritising the firm's commercial interests over the obligation to comply with the rules and safeguard customers from unaffordable loans," he added in a statement.
The FCA said it "would have imposed a fine of £72,900,000", but Amigo "demonstrated that this would cause it serious financial hardship" and a fine would also have made it difficult for the lender to carry out its court-mandated scheme to pay redress to customers.
Steward said: "The scheme aims to ensure an amount of redress is paid to affected customers that is better for customers, in these parlous circumstances, than any other likely outcome."
Amigo said it accepts the findings and that the conclusion of the proceedings "drew a line" under the issues. It noted that its board and senior management team have been changed and that it has developed a new business proposition, RewardRate, which "fully incorporates the lessons learned" and is accompanied by "more robust lending controls".
Amigo chief executive Danny Malone, who was promoted from finance director last September, said: "I would like to apologise again to any customers impacted for the past failings in lending practises that occurred during the period 2018-2020."
Last month, Amigo said it was still short of raising the £45mln of funding it needs to continue with its new business plan, but has made progress with a pilot lending scheme. If funding discussions are unsuccessful, the business would be wound down, it added.
Shares in the company surged 41% to 3.71p, though are down 98% since mid-2019 crack down on unaffordable lending practices, which opened the floodgates to a deluge of mis-selling complaints against doorstep and payday lenders.
** UPDATE: Adds share price **